Sader v. Griswold

United States District Court, E.D. Louisiana

August 1, 2017

JON SADER, ET AL.v.DAVID E. GRISWOLD, ET AL.

SECTION:
"A" (3)

ORDER AND REASONS

JAY C.
ZAINEY UNITED STATES DISTRICT JUDGE.

Before
the Court is a Motion to Vacate the Stay or Reopen Case and
to Compel Joinder of David Griswold to the Arbitration (Rec.
Doc. 47) and Motion to Vacate Stay and to Compel Deposition
of Party Defendant David E. Griswold filed by plaintiffs Jon
Sader, Sader Power Enterprises, LLC, and Sader Power, LLC
(collectively “the Sader Parties”). Defendants
David E. Griswold and Griswold Power, LLC (collectively
“the Griswold Parties”) oppose the motions. The
motions, scheduled for submission on June 14, 2017, are
before the Court on the briefs without oral argument.

This
lawsuit arises out of a sophisticated, multi-faceted business
venture between the Sader Parties and the Griswold Parties.
The venture involved a plan to install solar panel arrays on
homes in Louisiana and to fund those installations with
federal tax grants and Louisiana tax credits. Jon Sader and
David Griswold each formed business entities to effectuate
the plan. Sader contributed his ideas, expertise, and time
while Griswold supplied the funds to make their vision a
reality. In November 2011, the parties agreed to a business
plan; it is undisputed, however, that no written agreement
exists to govern all aspects of the business relationship.
Among the written agreements executed by the parties were
three Residential Solar Purchase Agreements
(“RSPAs”), each of which contained a broad-form
arbitration clause. But neither Sader nor Griswold was a
signatory in his individual capacity to the RSPAs.

On
October 24, 2014, Griswold Power, LLC filed a demand for
arbitration with the American Arbitration Association
(“AAA”) against the Sader Parties, including Jon
Sader individually. Griswold Power's claims against the
Sader Parties were based on the parties' various
agreements, including the RSPAs. On July 6, 2015, the Sader
Parties answered the demand but Jon Sader appeared solely to
contest the arbitrators' jurisdiction over him.

On July
22, 2015 the Sader Parties filed the instant complaint
against the Griswold Parties, including David Griswold
individually. The Sader Parties assert that they filed suit
in this Court because certain causes of action were beyond
the scope of the RSPAs' arbitration clauses and because
neither Sader nor Griswold were signatories to the RSPAs, and
therefore could not be joined as parties to the arbitration.
Thus, they envisioned this lawsuit would “close any
holes” left open by the limited scope of the
arbitration clauses.

On
November 17, 2015, the Griswold Parties filed a motion to
stay this lawsuit until after the resolution of the pending
arbitration proceeding. (Rec. Doc. 11). In that motion the
Griswold Parties explained the clear overlap between the
arbitration demand and the Sader Parties' complaint and
how the arbitration was expected to resolve many, if not all,
of the issues raised in this Court. (Rec. Doc. 11-1 at 2).
The Court granted several consent extensions with respect to
that motion.

On
January 15, 2016, the AAA Panel issued its Interim Ruling on
Jurisdiction (Rec. Doc. 29-5, Exhibit 4). In that decision,
the Panel determined that it had jurisdiction to determine
arbitrability, and that all of the claims asserted were
arbitrable, (Rec. Doc. 29-5). The Panel also determined that
it would “tentatively” continue with Sader as a
party even though the question whether a non-signatory can be
compelled to arbitrate is generally a matter for a court. The
Panel indicated that it would tentatively continue with Sader
as a party pending a ruling by the court.

The
Sader Parties then moved the Panel to join Griswold
individually in the arbitration proceeding arguing inter alia
that Griswold and Sader should be treated in the same way
since both were non-signatories to the contract that
contained the arbitration clauses. The Sader Parties also
pointed out that with Griswold joined in the arbitration
nearly all, if not all, of the claims between the parties
would be resolved. Griswold opposed that motion.

While
the motion to join Griswold was pending before the Panel, the
Sader Parties filed in this Court an unopposed motion to stay
the Griswold Parties' motion to stay until after the
arbitration panel ruled on the joinder motion. (Rec. Doc.
27). After explaining that the Court does not carry motions
on its docket without date, the Court ordered the Clerk to
administratively close this matter pending a change of
circumstances. (Rec. Doc. 28, March 2, 2016 Order). The case
remains closed at this time.

On May
4, 2016, the AAA Panel issued its Order Regarding Joinder of
David Griswold, Individually (Rec. Doc. 31-15). The Panel
denied the motion to join Griswold but without prejudice to
the Sader Parties' right to reurge the motion when the
federal court (this Court) has ruled on the propriety of
joinder. The Panel reiterated that the question whether a
non-signatory can be compelled to arbitrate is for a court
and not the Panel. The Panel reiterated that Sader was being
tentatively continued as a party because he had been named as
a respondent party in the original demand and because of the
potential that the Court might order him to arbitrate.
(Id. at 7).

The
Sader Parties then moved to either compel joinder of Griswold
individually in the arbitration proceedings or to dismiss
Sader in his individual capacity from the arbitration. (Rec.
Doc. 29). The Court was not persuaded that the Sader Parties
had established that Griswold should be joined in the
arbitration. But the Court likewise found that the AAA Panel
had exceeded its jurisdiction when it decided to exercise
tentative jurisdiction over Jon Sader individually. The Court
Ruled that if Griswold would not consent to the jurisdiction
of the arbitration panel then the arbitration would likewise
proceed without Sader in his individual capacity. (Rec. Doc.
40).

The
Sader Parties now move once again to compel Griswold to join
the arbitration. The Sader Parties contend that Griswold
should be compelled to arbitrate based on the alter ego
doctrine-a basis that they did not raise in their prior
motion. The Griswold Parties contend that the Sader Parties
are merely seeking reconsideration of the Court's last
order denying Griswold's joinder, and that alter ego is
not a new contention in this case. The Griswold Parties also
challenge the sufficiency of the Sader Parties' evidence
of alter ego.

The
Sader Parties' new motion to compel Griswold to join the
arbitration pending between the corporate entities is DENIED.
The Sader Parties filed their lawsuit in this Court for the
express purpose of pursuing whatever claims of theirs that
fell outside the scope of the arbitration clause. If
Plaintiffs prevail against Griswold's company in the
arbitration then they can pursue him individually in this
action once the arbitration is concluded. The Court has
already alluded to the great waste of time and money that
will surely ensue if the parties arbitrate their dispute
without ...

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